The U.S. Strategic Bitcoin Reserve could lose nearly 30% of its holdings in a single legal action, even if the government doesn’t sell a single coin.
Last year, President Donald Trump signed an executive order creating the Strategic Bitcoin Reserve. The order directed the Treasury Department to consolidate government-held BTC into reserve accounts and promised that the United States would not sell those coins.
However, the headline figure for reserves may overstate the amount of BTC that governments can actually treat as a permanent strategic asset.
According to Bitcoin Treasury data, the US government is estimated to control approximately 328,372 BTC. This makes it the world’s largest known state holder. At the current Bitcoin price of about $65,842, that stash is worth about $21.6 billion.
However, a complication arises here. Although a large portion of the US holdings includes government-held BTC, it is not wholly government-owned in a strategic sense.
The Executive Order expressly authorizes disposition based on court order in the jurisdiction. It selects a specific division of assets to be returned to identifiable and verifiable crime victims.
This exception is significant because approximately 94,643 BTC, or approximately 30% of the government’s holdings, are linked to the 2016 Bitfinex hack.
If these coins are returned as compensation, the reserve number will be mechanically reduced to approximately 234,000 BTC.
Reserve number is real, but ownership issue is still unresolved
Strategic Bitcoin reserves are often discussed as if they were a clean sovereign balance sheet. In reality, law and accounting are mixed together.
Some of the BTC belonging to the government has been completely confiscated and is clearly under US control.
However, some people are still embroiled in criminal cases, claims, or proceedings that can take years to resolve.
This gap is currently at the center of the debate over U.S. reserves.
The 94,643 BTC associated with Bitfinex is the clearest example. These coins are visible in government-related vaults and the market counts them.
However, if the court decides that they should be returned to the victims, it means that they were never truly permanent strategic reserve assets in the first place.
This is why both sides of a public debate can miss the point.
The bullish version overstates the durability of reserves if it treats all government-controlled coins as permanently strategic. The bearish version exaggerates the market impact if we treat reparations transfers as sovereign sales.
The legal distinction is important to price, sentiment, and how investors interpret the Strategic Bitcoin Reserve itself.
Why Bitfinex coins remain frozen
Bitfinex thefts include the theft of 119,754 BTC in August 2016, one of the largest BTC thefts in crypto history.
In February 2022, U.S. authorities recovered approximately 94,643 BTC related to that hack, but this seizure was remarkable in both its size and timing.
The next issue was always compensation.
In January 2025, prosecutors asked a federal court to approve the return of the recovered assets to Bitfinex as compensation in kind. This means that BTC is returned as Bitcoin, rather than being sold and converted to dollars first.
This distinction is important for market structure.
Government sales and auctions create visible supply events whose timing and magnitude are known in advance. Physical returns push the next decision downstream, to the recipient.
Depending on how the courts resolve the competing claims, it could be Bitfinex, its former users, or both.
U.S. forfeiture procedures are designed to delay this step. Third parties claiming an interest in confiscated property may file a petition in ancillary proceedings. In the case of Bitfinex, that process is the central battleground.
Some customers claim the stolen assets are theirs. Bitfinex, on the other hand, claims that it ultimately suffered financial losses after socializing the losses and then making its users whole through internal mechanisms.
The outcome is therefore important far beyond this incident, as it may determine how reparations are handled in future exchange hacks.
Until the courts resolve these claims or the parties reach a settlement, the coin remains effectively locked in.
As such, reserves can appear stable on-chain even though they remain uncertain in legal terms.
LEO acts like a market agent for court results.
Although legal proceedings remain delayed, traders are attempting to price the outcome through Bitfinex and iFinex’s exchange token, UNUS SED LEO (LEO).
Bitfinex stated that if it receives the recovered BTC, it intends to use 80% of the net funds to buy back and burn LEO within 18 months.
The company noted that this process could include over-the-counter transactions such as direct swaps between BTC and LEO.
The policy effectively turns a federal court ruling into a massive stock buyback pipeline. This provides the market with a mechanism to speculate on timelines well in advance of legal resolution.
With this in mind, Vetle Lunde, head of research at K33 Research, models LEO with two key value drivers. These include ongoing buybacks funded by Bitfinex trading proceeds and future burns associated with recovered Bitcoins.
Using a baseline of approximately 95,000 BTC collected, Lunde estimates that an 80% allocation is equivalent to approximately 75,000 BTC. At current prices, that pool is worth about $5 billion.
Meanwhile, he calculates that the trade revenue buybacks alone have a fair value of about $125 million.
However, trading in this catalyst is very volatile.
LEO has a market capitalization of about $8 billion, but 24-hour trading volume is just $7.1 million, according to CoinMarketCap data. This lack of liquidity can significantly magnify price volatility.
On the other hand, the large market cap also indicates that LEO is trading at a premium of around 60% to its implied fair value.
This is the highest premium since the long period of price increases following the first foreclosure announcement in 2022.
LEO’s high liquidity and concentrated ownership means current premiums remain noisy, Runde said, meaning a small number of participants can significantly distort the market.
As a result, traders may be at the forefront of court proceedings, or simply riding on momentum in an environment where fair value takes a backseat.
Ultimately, LEO’s illiquidity will amplify the bottom line. If the transfer is confirmed, the valuation could rise further in the short term.
Conversely, if supply allocation is conservative or delayed, premiums can be compressed quickly.
Why headlines can have a bigger impact than actual BTC flows
The broader macro context explains why this story is likely to stir emotions even before the court decides anything.
Bitcoin has been traded in a risk-off regime since early 2026.
By way of background, the Spot Bitcoin ETF has seen sharp outflows of more than $4.5 billion this year, with outflows continuing for five consecutive weeks.
In such an environment, traders are already sensitive to supply headlines, especially those related to state-owned BTC.
Therefore, the headline that the US is transferring around 95,000 BTC will shock the market.
If the coin were to leave government control, the move would be a return rather than a government sale.
And if Bitfinex receives the coins and follows a defined buy-and-burn plan, the resulting BTC flow will likely be split over time rather than being brought to market all at once.
Even with more rounded calculations, approximately 75,000 BTC in 18 months is approximately 139 BTC per day.
While this may impact the price of LEO, it does not represent a significant supply shock compared to the much greater distribution pressure that Bitcoin has already absorbed from long-term holder and ETF outflows over the past five months.
Therefore, the real market impact may come from the narrative framework rather than the coin flow.
This is because the Strategic Bitcoin Reserve is more than just a stockpile of BTC. This serves as a political and market signal that traders can read as either bullish or bearish, even if the legal status of those coins remains unresolved.
This is why the “US loses 30% of its Bitcoin reserves” framework is likely to cause volatility. Emotionally clean. Perfect for a headline. It is also stripped of legal substance.
However, the legal substance is a story.
SBR was built to coexist with reparations. Once Bitfinex tranches leave government control, tracker reserves will decrease and the market will react.
But the deeper point remains the same. The United States will not retreat from its reserve policy. It would be subject to the rule of law, which is exactly what the reserve framework says it will do.